Eskom is in dire financial situation with R419bn in debt already

Public Enterprises Minister Pravin Gordhan on Tuesday said the South African government led by President Cyril Ramaphosa will decide the fate of Eskom soon.

The ailing South African electricity power utility Eskom has been going through tough times owing to a decade of steep financial decline. The embattled state-owned enterprise is in dire financial straits with R419bn in debt, which it is unable to pay off from its own revenue. The company’s power plants are in a poor state of repair due to postponed or foregone maintenance causing unplanned power outages.

President Ramaphosa even hired experts to propose measures to help revive the ailing company. The experts have recommended the government to consider splitting Eskom into three state-owned entities responsible for power generation, distribution and transmission in what being termed as a strategic unbundling, sources familiar with the matter told Reuters.

The Ramaphosa led government is expected to take a decision on splitting Eskom after meeting the experts this week. The power utility’s fate will also be debated at a cabinet meeting starting on Wednesday.

“Should Eskom be unbundled into generation, transmission, and distribution, as is the worldwide practice? That is a debate we are going to have soon,” Gordhan said during a business conference.

Gordhan added that the decision once taken will be implemented soon. He also said that the government would be willing to sell stakes in state firms to private investors only when it gets to a level of stability in some of these outfits.

“The fiscus doesn’t have space for endless bailouts,” Gordhan said referring to the budget.

Last week, President Cyril Ramaphosa ensured that the government will not allow the power utility to fail. He said that the government will soon announce plans to resolve the challenges facing Eskom.